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Declining Health Coverage For Low-Wage Workers

Feb 27th, 2012

health coverageSeventy-five percent of low-wage workers do not have health coverage from their employer and close to 40 percent of them are living without health insurance of any kind, a recent report from the Center for Economic Policy Research and the Georgetown University Kalmanovitz Initiative for Labor and the Working Poor.

The report entitled “Health-Insurance Coverage for Low Wage Workers, 1979-2010 and Beyond,” analyzed data over the last 30 years focusing on changes in coverage rates by wage-level and race. The study provides a new perspective and gives insight on how low-wage workers are being affected by the decreasing number of employer-provided health insurance.

In the past thirty years, employer-sponsored health insurance has been declining for workers all over the country, but low-wage workers have the steepest rate of decline, according to the report. In 1979, 43 percent of low-wage workers had health insurance from their employers. However, In 2010, only 26 percent had employer-provided health insurance.

Many low-wage workers without employer-provided coverage are not seeking other forms of health insurance. Data from 1979 shows that 16 percent of low-wage workers do not have any form of health insurance, private or public. In 2010, that number rose to 39 percent and only 13 percent have some form coverage, including Medicaid.

The report estimates the effect of the Affordable Care Act (ACA) on future coverage rates for low-wage workers. Based on projections and data from Massachusetts, whose health system is similar to ACA, the report predicts that the full implementation of the ACA will reduce non-coverage rates for low-wage workers from from a high of 40 percent to less than 20 percent.

“Low-wage workers have a daunting challenge of getting health insurance for themselves and their families,” according to John Schmitt, report author and CEPR economist. “The ACA could do a lot more, we think coverage for low-wage workers will expand once implementation is complete.”

The report defines low-wage workers as those who belong to the bottom 20 percent in terms of hourly pay. Data from the Current Population Survey (CPS) were used to analyze coverage rates from all sources of health insurance, which includes employers data, available health policies, Medicaid, and other public sources.

“We find that there is a great imperative need for research on the causes and solutions in the midst of increasing inequality and stagnating wages,” according to Jennifer Luff, Research Director of the Kalmanovitz Initiative. “Improving the standards for low-wage workers through various programs like affordable health insurance is important to curb and reverse these trends.”

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